Trust Income Mortgage

 Can I get a mortgage using income from a Trust?

Yes, you can get a mortgage using a Trust. Many lenders will consider Trust income, especially if it’s regular and you’ve got a good track record of it.

It is far more complicated to use Trust income than other income types, though. It’s really important for a broker to understand the client’s full situation. Key things are: the type of Trust, how long you’ve been receiving that income for, and how many beneficiaries there are.

What is Trust income and how does it impact mortgage applications?

Trust income refers to money distributed to a beneficiary from a Trust. A Trust is a legal arrangement that holds assets like property and shares for the benefit of someone else – the beneficiary.

Normally income comes from share dividends, rental income from property and the proceeds from assets sold within the Trust.

Can you get a mortgage with Trust income as your only source of income?

Yes, definitely. In fact, I’ve done this for many clients – including one just last month. I’ve certainly organised transactions where the sole income is from the Trust.

We’ll need to understand all the aspects of the Trust. Most high street banks are typically cautious and may well not understand the full Trust complexities. Often a specialist lender is more adapted to deal with this.

How do lenders assess a mortgage with Trust income?

Lenders who understand the Trust will assess this like any other income received, and offer you a mortgage of up to five to 5.5 times that income.

Lenders may require a Trustee’s letter, your tax returns, and often six months’ bank statements – plus a Trust deed summary, which essentially tells the lender all the information about the Trust. They need all these details to make sure they’re happy to lend you a mortgage. It can be quite chunky on the document side.

How much can I borrow with a Trust income mortgage?

It varies from lender to lender, but most will offer between four and 5.5 times your annual Trust income.

If you earn £100,000 per year from a Trust, you could borrow up to £550,000 – depending on the lender and your overall financial profile.

What deposit is required for a Trust income mortgage? Can I get a mortgage with Trust income and a small deposit?

It depends which lenders we approach. Most lenders would prefer a 25% to 30% deposit when Trust income is involved.

It all depends on whether that Trust income is sustainable and if all the boxes are ticked. But if you’ve got any other income or other assets, lenders may accept perhaps a 20% or 15% deposit.

What evidence do I need to provide for Trust income when applying for a mortgage?

When applying for a mortgage using Trust income, lenders need to verify that the income is regular and sustainable – that’s really important. They will be looking for three to six months’ bank statements, plus a Trustee letter or reference from an accountant.

We also need the Trust summary and your tax returns or self-assessment documents, to make sure you’ve actually been paid the money.

How does Trust income frequency affect my mortgage application?

The frequency of Trust income payments – monthly, quarterly or annual – has a significant impact on how these lenders assess your affordability and borrowing potential.

Monthly payments are seen as a more stable, predictable way of receiving income as it’s more regular, which is ideal for affordability assessments. Quarterly payments are viewed very much the same.

If Trust income is received annually, some lenders may be more cautious and may only count 50% or 60% of that income towards your affordability – unless you’ve got a really strong track record.